BUYING A CAR

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Buying a Car
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As we accelerate into the final lap, let's go back over a few points that we zoomed past during our recent fax-a-thon in Step 12. Perhaps you've been wondering, "Will the fax method always work?"

There are circumstances in the vehicle retail market which from time to time align themselves to work against a bidder's market. Probably the most striking example is GM's Saturn. It is indeed a different kind of car company, and one that has made a lot of Saturn dealers rich by eliminating internal competition. If you perform the first 11 steps and determine that one of the Saturn models is for you, just go ahead and skip Step 12 because all your bids will be for the exact same amount. That's right, these fellas won't even negotiate a price on optional floor mats with their mother-in-law; it's take it or leave it, full MSRP, and that's what the no-dicker sticker is all about. In fact, if you're going to buy a Saturn, go to the dealership closest to your house, because the next farthest one out is probably owned by the same principal dealer. If you do decide on a Saturn, though, the rest of the process (everything except Step 12) still applies.

The fax-a-thon may also come up short at the "Low Supply and Heavy Demand" end of the business. This little game tends to play out with new models, high-end (expensive) small lot production vehicles, or models that aren't even on the market, but have created a buzz via the automotive press and the automaker's publicity machine. Generally speaking, this applies to the sports car niche, as with vehicles such as the BMW Z3, Mazda Miata, and Dodge Viper, all of which sold above MSRP for several months after their introduction. If you determine you need a vehicle like this during its introductory time frame, be prepared to keep that dealer smiling, because the cash will be flowing from your wallet. Then again, it might be time to reconsider the "Just Don't Do It" advice we set forth in Step 1.

Then there are the imports (note that the transplant models are not in this group; we are speaking of the vehicles that actually arrive on North American shores stacked in a boat, fully assembled). These vehicles are doled out to dealers in a strict allotment. This often creates a high supply-and-demand price which dealers use to their advantage. The import retail market is often much more "market"-dependent -- the price that the market will bear is constantly changing, but is generally between MSRP and dealer invoice. If the fax-a-thon system fails to work initially on these types of vehicles, a consumer may want to be patient and wait them out, or consider a European Delivery Program if applicable, or extend the dealership circle out another couple of hundred miles.

A more recent change in the automotive marketplace which may affect the fax-a-thon is the trend toward Mega Dealers, even Super Mega Dealers , and Corporate cities. Still very new, they appear to be creating "monopoly" territories in certain markets across the United States. For example, Ford and General Motors have shown interest in combining dealerships under one umbrella for entire cities, such as Tulsa. Thus, getting all the Ford dealers to bid against each other in Tulsa may prove to be somewhat futile. The first defense against such an attack on the fax-a-thon system is to go farther out, getting the non-monopoly stores in on the action.

You may also have to go farther out if you live in a remote location. You need 10 or more unique dealerships bidding against each other for such a system to have a fighting chance.

These cases, though, are overwhelmingly the exception, not the rule. But no matter what negotiating tactic is used, determining a real price benchmark such as the Foolish Value Price (FVP) will serve the you well in any vehicle market.

A car buyer may follow parts of the process outlined here and still make a "bad" purchase. We can't emphasize enough that the consumer is best served by moving methodically through the process, stopping frequently to reflect and interpret the choices you've made. Ask yourself, "What would be lost in starting over again?" Patience, in car-buying as in investing, is a great virtue.

If that's so, you may wonder, what are you to do about timing the purchase?

Generally speaking it is best to start your fax-a-thon about one week before the end of the month. Why? Well, most, but not all, dealer incentives and allotments are on a monthly basis, so the dealerships are more eager to move inventory at the end of the month. Starting a week before the end of the month gives you the required time to perform the fax-a-thon while still allowing for the maximum use to your advantage of the inevitable pressure the regional sales manager is placing on the dealerships.

Of course, the piranhas on the other end of the negotiating table have figured this out, and have altered these systems so that end of the month timing doesn't have the same importance that it did five years ago. Here again let your Foolish Value Price (FVP) help you. If you receive bids within a few percent of this figure, or if you see the FVP decreasing over time for your chosen vehicle, then your timing may in fact be right on the money.

What about all those dealerships from which you received bids, but which didn't win your business?

You may receive follow-up faxes and phone calls. Let the other dealerships know that you've taken your business elsewhere. A simple one-page "Thank You for your time" fax should put the kibosh on the fax traffic. Just be sure to wait until your best offer is in the bag.

There are just a few oil slicks on the asphalt before you cross the finish line. Recall from Step 11 our Foolish Car Buying Strategic Defense Initiative (FCB-SDI):

  • Step 1:Negotiate the price of the new car
  • Step 2:Value the trade-in vehicle
  • Step 3:Arrange financing/leasing

Well, in Step 12 we finished off Step 1. In Step 10 we made preparations for selling our old ride, as part of Step 2. If you've decided not to sell the creme puff in the classifieds, the time to start discussing it with the new car dealer is when you tell them that they've won your business. Set up a session to go over the paperwork and have them give you a price on your trade; make this a separate date and time from the delivery.

We set down the final financial preparations in Step 11, but as with the trade-in, you might want to hear from the dealer's Finance & Insurance Manager as to what the dealer can offer in the financing arena. Once again, set up this finance session well before you take delivery, and remember always to keep these three rules separate and in strict order. That is, you have a firm price on the new vehicle, then talk trade-in value, then finance.

Once you've jumped through all these hoops, you can set a specific date and time to take delivery of the vehicle. Don't sign anything formal yet; a small deposit may be necessary, as well as a signature on the bid price agreement. You want to make sure you're getting what you want before you commit your John Hancock. The additional time gives you a chance to renegotiate trade-in and finance deals elsewhere, and to look over the paperwork out of the dealer's spotlight. It is important that you read and understand all the paperwork that you will be required to sign. If your deal involves any calculations, check them yourself. You'd be surprised how many "mistakes" are made in lease and loan calculations.

At delivery, you should expect the vehicle to be fully demonstrated to you, even more in-depth than on your test drive. Each and every feature should be gone over in some detail by the dealership personnel, from the voice-activated cigarette lighter to the fingerprint-sensitive passenger-side ejection button. Accept nothing less. You should also take a brief drive in the vehicle to check out the "driveability" of this specific vehicle. The best dealerships may even introduce you to "your" service manager, who will walk you through warranty and maintenance matters for your vehicle, even inviting you back for a free checkup after so many days of ownership. Listen and learn.

Once you are fully satisfied with the vehicle and all the paperwork, sign what has to be signed, hand over what cash has to be handed over, shake hands with anyone in the dealership that helped you through the process, and don't forget to smile as you say "Thank You!" Then Fool, take your new keys and drive!

The steps in this process have been presented as guidelines. Feel free to modify and to be creative. Please do let us know what worked and didn't on our Fool Car Buying Message Board.

We look forward to seeing you there! Remember to be Foolish, brake for animals, be kind to whales, observe all international road signs if you should find yourself driving in Sri Lanka, keep your sparkplugs clean, don't learn how to hot-wire other people's cars, and always drive at speeds that take into account the current road conditions.

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